Big business will be licking its lips in anticipation of what could be a billion dollar tax break it is rumoured Peter Costello will deliver in tonight’s federal budget.
It is expected Costello will announce reforms to the tax system to allow businesses with turnover of more than $100 million to offset previously quarantined tax losses against future profits, potentially saving them billions of dollars in tax, The Australian Financial Review reports today.
PKF tax partner Scott McKay says that it appears that businesses with turnover of less than $100 million will not benefit from the tax break because they are not currently prevented from writing off the quarantined tax losses against profits.
But, he says, smaller companies with large accrued losses will benefit from the change because they will become more attractive acquisition targets for big business.
McKay says small resource and IT companies with big exploration and R&D losses could be big winners from the change.
Most business owners, however, will be hoping that the big chunk of money set aside for the big business sector, which is experiencing record profitability, is matched by an equally attractive tax cut for the SME sector.
It is anticipated Costello will have a record budget kitty at his disposal tonight, with a startling $2 billion a day in company taxes flowing into Treasury coffers over the last two weeks. We hope SMEs, the engine room of Australia’s economy, get their fair share.
– Mike Preston
Peter Costello was sticking to the script this morning. At a doorstop interview in Canberra he said the budget will be “about getting ready for the great challenges which will come down the track at us in relation to the ageing of the population, in relation to the environment”.
Costello acknowledged again the risk of a spending spree on interest rates. “We have to make sure that we keep price pressures out of the economy… We want inflation to be at the middle of our band – 2.5% – between 2% and 3% on an underlying basis over the course of the cycle, and that is where we are aiming.”
He refused to comment on speculation that the budget will contain tax cuts.
– Jacqui Walker
SmartCompany will publish its special budget coverage tonight. So come back to SmartCompany.com.au tonight or first thing tomorrow to read how the budget will affect you and your business.
Business and consumers will be protected from tax penalties incurred through acting on poor advice from tax agents under new draft legislation release by Federal Assistant Treasurer Peter Dutton yesterday.
But registered tax agents, most of whom are accountants, will face a range of onerous duties and face civil penalties of up to $27,500 per infringement under the changes, under a new national code of conduct.
Tax Institute of Australia senior counsel Michael Dirkis says the proposed tax rules contain both carrots and sticks for the tax profession, but is a definite win for their business and personal clients.
“The legislation creates a safe harbour for taxpayers using tax agents – if you have given all your information to a tax agent and they make a mistake that incurs a tax penalty, then the client won’t be liable – that is a big positive,” Dirkis says.
It is likely tax agents will respond to this change by asking clients to certify and sign-off on the information they have provided to avoid disputes if something goes wrong down the track.
Another big change contained in the package will see tax agents required to ascertain the accuracy of the information provided to them by clients. Dirkis says it is unclear just how far tax agents will need to go in order to satisfy this requirement.
“Not only could prudent tax agents be forced to second guess everything given to them by their clients to cover themselves, they may have to double check what the client’s bookkeeper has done too. It really needs to be cleared up.”
Dirkis agrees the civil penalties proposed under the legislation are quite onerous, but says that on the whole the changes will be a positive for tax agents. Moves to create a single national tax practitioners board will reduce professional red tape, he says, while the new penalty regime is much more flexible than the current system under which suspension or expulsion are the only options.
Funding of $57.5 million was allocated in last year’s budget to meet the cost of changing over to the new regime. Submissions on the new legislation can be made until 13 July 2007.
– Mike Preston
National retail sales rose by 1.1% in March to a seasonally adjusted $19.027 billion to post their strongest monthly gain since April last year, Australian Bureau of Statistics figures released today show.
All states and territories enjoyed an increase, with Queensland (2.1%) and the ACT (1.9%) doing the best. Department stores and household good retailers were the best-performing sectors.
The rise beats expectations and some economists are suggesting it could push up inflation by the end of the year.
– Jacqui Walker
Business could have a long wait to see the detail on the Government’s fairness test on AWAs, with legislation to implement the change not likely to be introduced until Federal Parliament sits in June.
The delay, coupled with the current freeze on lodgement of new AWAs, means many businesses and employees will be left in an industrial-relations limbo they can ill-afford.
And question marks today emerged over whether the Workplace Authority will have the resources to quickly process new AWAs against the fairness test once the system is up and running.
Industrial relations expert Professor Andrew Stewart says the Workplace Authority, previously called the Office of the Employment Advocate, will need a huge boost in staff and resources in order implement the new regime, The Australian reports today.
Meanwhile, all SMEs want to do is get on with business. It seems they are being forced to pay a heavy price for the Government’s political fix on IR.
– Mike Preston
China’s lack of enforcement of intellectual property rights is causing renewed tension between Australia and China. Despite warnings from Beijing, Trade Minister Warren Truss has defended Australia’s rights to join a US complaint to the World Trade Organisation.
Australia is yet to decide if it is joining the WTO action, which relates to China’s copyright violations and restricted market access for audio-visual products, The Australian Financial Review reported today. But Beijing has warned that a complaint could compromise free trade agreements between the two countries.
– Amanda Gome
The value of total building approvals fell 3.7% in March, according to figures released by the Australian Bureau of Statistics today. The seasonally adjusted estimate for the total number of dwelling units approved fell 11.4% in March, a big reversal on February’s 9% increase.
Qantas shares dropped less than expected after trading resumed this morning – they were selling for $5.25 at 12.45pm, down 2.5% on Friday’s closing price.
The S&P/ASX 200 is down 0.5% to 6304.2 at 12.45pm and the Australian dollar is trading at US82.92 cents, up from yesterday’s US82.47 cent close.
– Mike Preston
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